David and I met at a marketing meeting in 2017 and we’ve been inseparable since. He inspires me every day! He teaches me how to be patient and shows me new ways of investing and looking at the world.
His support is a HUGE reason why Ambitious Adulting exists today, and I am thrilled to share a bit of him with you today. I asked him a few questions to learn more about his perspective on money and investing.
What’s the best piece of financial advice you ever receive?
The best piece of financial advice I received was based on a quote from Warren Buffet. ‘Be fearful when others are greedy and greedy when others are fearful’. This is a simplified approach to evaluating the value of an investment. When others are greedy, the price of an asset is typically overvalued and you could find yourself making lower returns in the long run. Conversely, when others are fearful of an investment, the asset may be undervalued presenting a good opportunity to buy. You can think of it like buying a designer brand product ‘on sale’ at a thrift store vs at regular price at a boutique.
I like to keep this advice front-of-mind, as it can be contrary to my instincts and emotions. When a stock is doing really well and other investors are buying more, I would naturally think it would be wise to buy more as well to ride the wave up. However, I’ve found much more success looking at investments with a long term outlook, being patient, and buying when I feel the fear ‘baked’ into the stock is overblown and thus is ‘on sale’.
A recent example of the market being greedy, was with the legalization of cannabis in Canada. Money flooded into cannabis stocks, which was thought to be a no-brainer investment (I stayed away). However, greed led to stocks being way overvalued and prices have been in a downward spiral for the last year.
On the other side, investors were fearful of Facebook stock after the Cambridge Analytica scandal broke in addition to anti-trust claims made against the company. The uncertainty surrounding the company led to many investors selling off their shares, causing the stock to drop by ~40% in less than 6-months. I looked at the long-term view, believing the scandal would be a temporary hurdle for the company and would continue to dominate the social media marketing space. At the time of writing, Facebook stock has been up 50% from its 52-week low.
What’s your advice for young people trying to save money?
‘Pay yourself first’. This means, before paying any bills, purchasing groceries, or going out for dinner, pay yourself first by contributing to your savings account. I always considered myself responsible with my money and would contribute to my savings whenever I had leftover money at the end of the month. Though I had modest gains in my savings, there were months where I didn’t save anything at all. Then someone at the bank recommended I set up an automatic contribution to my TFSA based on my savings goals. I now consistently save at least $1000/month by having $500 automatically transferred to my TFSA each payday. I never see the money in my account, so I never consider it available to spend. The best part is I honestly haven’t felt a major blow to my lifestyle. I’m simply more mindful of my purchasing decisions and more accountable to my budget while saving for my future.
How has your view on money changed over the years?
Over the years, I’ve taken the concept of the ‘time value of money’ more seriously. This is the general idea that a dollar in hand today is worth more than a dollar in hand at a later date. With the dollar in hand today, you can put it in a savings account and earn interest or even invest it in the stock market to potentially earn even more. Let’s say you put a dollar in a savings account today earning 2% interest, a year from now that dollar would be worth 1.02. I used to think these money management decisions had a minimal impact, but now see how they can make quite the difference when applying to greater amounts.
For example, I recently purchased a laptop for $2500. The distributor offered free financing for the first 12-months. Though I had the money available to buy the laptop outright, I chose to finance it for 12 months before paying off the remaining balance. In the end, I was able to take the $2500 and invest it in the stock market, where I earned a 10% return ($250). Not life-changing, but certainly a nice bonus.
This doesn’t mean it always makes sense to defer the outflow of money to keep cash in hand. For example, I’ve been given the option to pay my car insurance bill monthly (i.e. $180/month) or save 10% by paying all at once (i.e. $1,944). By paying up front, I am essentially investing in something that will give a guaranteed 10% return. If I have the money available, I choose this option every time.
Which projects are you most proud of and why?
I am most proud of the role I had managing a social enterprise called FreshInsights Consulting. The organization aimed to accelerate the careers of young professionals while providing value-added consulting services to small businesses and start-ups.
The organization’s model was designed to tackle a few local challenges/opportunities in the market. For one, new graduates were having a difficult time finding their first job out of university, as many jobs required some level of work experience. Secondly, businesses were looking for expertise and business support but didn’t necessarily have the budget to pay a traditional consulting company or hire a full-time employee. Finally, there was a network of retired/semi-retired professionals that were looking for ways to make a positive impact in their community.
With the help of a provincial grant and municipal support, FreshInisghts Consulting offered affordable business consulting services by pairing the fresh approach of new graduates with the knowledge of experienced mentors. During my tenure, we completed projects for over 25 clients and helped over 20 graduates land full-time jobs upon completing the program.
Managing this initiative gave me a great sense of pride, as the model truly delivered on its promise of accelerating the professional growth of new graduates while delivering value for future-thinking companies.
What money lesson do you wish your parents taught you as a child?
I wish my parents reinforced the idea that the best investment you can make is in yourself. Sure, I was definitely pushed by parents to go to university, which can be looked at as investing in myself, but I never considered myself as an investment vehicle. I simply went to university because I thought it was the only path to being successful. Looking back on it, I see my degree as a very expensive piece of paper that helped me get an entry-level job.
I sometimes think, what if I had taken the money I spent on tuition as well as the 5 years of time spent studying and instead invested it into launching a business or multiple businesses for that matter. I could take many small ‘bets’ and even if they all fail, I’d certainly learn a lot in the process. As life gets more complicated, I now find it more difficult psychologically to give up my steady paycheck to pursue my personal business ideas. I truly admire the mindset of entrepreneurs and wish that was more ingrained in me as a child.
What resources do you use to learn about business or personal finances?
I listen to a ton of podcast on my commute to and from work. Planet Money, Mad Money, and the Tim Ferriss show are a few of my favourites to listen to, to stay up to date with the economy, the stock market, and business.
What’s your money management system?
I have a money tracking spreadsheet and I try to keep up to date monthly.
Get the free budget template that Liz and I both use.
